Jeg har lige læst en artikel om Kinas Outbound Foreigh Direct Investment fra ChinaBriefing, og synes at de sektor Kina gerne vil investere i matcher perfekt til Danmarks kernekompetencer, derfor vil jeg dele den med jer: "Times are changing for the global financial community. China was the largest investor in developing economies in 2010 and 2011, with total outbound foreign direct investment (OFDI) amounting to US$60 billion annually and projected to reach US$150 billion by 2015. Furthermore, Chinese leaders have now officially prioritized Chinese outbound investment over the historical priority of inbound foreign direct investment. China’s support for OFDI, however, has a strategic basis and is highly selective. The purpose is to focus outbound investment in a manner that fosters the growth and development of strategic Chinese industries, not to generally liberalize or relax foreign investment or foreign exchange policy. Priority investments would include those that expand markets for Chinese companies, obtain critical know-how and technology, and secure resources for China’s internal growth. According to the 12th Five-Year Plan and the officially issued OFDI catalogue, priority should be given to the following industry sectors:
Although China has prioritized OFDI, it is moving cautiously and carefully. State-owned enterprises (SOEs) and their subsidiaries have typically served as the primary conduit for investment, and appear poised to continue to lead the campaign. However, recent comments by Chinese leaders and the Chinese media suggest there is growing support for investment abroad by smaller and medium-sized Chinese enterprises, particularly in the form of corporate acquisitions. As such non-SOE Chinese companies pursue greater opportunities abroad, they will have to endure close regulatory scrutiny in the form of a rigorous official approval process and a demanding on-going annual review. Compared to their SOE counterparts, the formal approval process will often include an additional level of formal evaluation by the Chinese government’s Development and Reform Commission (DRC) to ensure such investments coincide with China’s broader strategic goals. Thereafter, the proposal will also be considered by the Ministry of Commerce (MOFCOM) to evaluate the competence of the investor and soundness of the investment plan. China’s SWFs and SOEs Lead the Way Compared with past efforts, what may be different in the reliance upon SOEs to carry China’s investments abroad is that the new strategy includes SOEs drawing more heavily upon the expertise and resources of foreign professionals to advise and implement investment decisions. It’s not uncommon these days to see the biggest names of the global financial and legal industries visiting China’s SOE headquarters to pitch their services and advise on the latest investment proposal. There is heightened concern with successful execution after recent high profile blunders. CNOOC’s recent acquisition of Canadian oil producer Nexen is a model example of a successfully executed investment compared with its failed efforts to acquire Unocal in 2005. The Nexen investment is closely aligned with China’s OFDI strategic objectives and is being successfully carried out with only mild controversy. China National Gold Group’s pursuit of African Barrick Gold is another current example. Scrutiny by Multiple Chinese Agencies
Approval by these agencies may require review at either their provincial or central government-level branches, depending upon the specifics of the proposed investment. For the highest value investments, the DRC would also need to forward the application to the Chinese central government’s State Council for review. By contrast, China’s SOEs may pursue an abbreviated approval process that eliminates the need for approval by the DRC, provided the investment is below certain thresholds (less than US$30 million for resource exploration and exploitation investments, or when the foreign exchange involved is less than US$10 million). Since China’s SOEs are supervised and closely monitored by SASAC, government participation in investment decision-making (and tacit approval) would presumably have begun at an early stage. In the final step of the investment approval process for private Chinese companies, SAFE would review the tentatively approved application to grant the final stamp of approval. The term “investment” refers here to the Chinese investor’s contribution by way of currency, marketable securities, goods, intellectual property, technology, stock equity, creditor’s rights or other assets or rights, or the provision of a guaranty. Regulatory Approval Thresholds
Special projects include:
Provincial Development and Reform Commission
By way of background, China has 33 provincial-level divisions, including 22 provinces, 4 municipalities, 5 autonomous regions, and 2 special administrative regions. For approval purposes, provincial-level equivalents are the governments of these divisions. The four municipalities directly under the Chinese central government are Shanghai, Beijing, Tianjin, and Chongqing. National Development and Reform Commission Regardless of the amount, so-called “special projects” must be reported to the NDRC for review and consideration after the provincial-level DRC conducts a preliminary examination, or shall be directed to the State Council after the NDRC conducts its own preliminary review. Ministry of Commerce Chinese outbound investments of US$100 million or more are subject to MOFCOM approval at the central government level. Likewise, investments in sensitive geopolitical locations also require MOFCOM review at the central government level and would likely receive heightened scrutiny, including investments in the following:
State Administration of Foreign Exchange Note that representatives of SAFE, the DRC, and MOFCOM have confirmed there is no floor below which approval need not be sought. However, where a Chinese individual seeks to convert and transmit funds abroad in lesser amounts such as US$50,000 or more on an annual basis, he or she may only be required to register with SAFE and in some cases may first need to obtain the pre-approval of MOFCOM. There is a general understanding that outbound monies amounting to US$50,000 or less do not need to undergo review. Recently SAFE has taken a special interest in “round trip” investments where a Chinese person establishes and capitalizes a foreign entity that then reinvests in China. Under SAFE Circulars Numbers 19, 75, and 106, this kind of investment must be registered with SAFE and any subsequent changes of a substantial nature further recorded with SAFE. Project Bidding Development and Reform Commission Review Process With respect to each of these submissions, the DRC or equivalent must decide to accept or reject the application within five days and shall issue the Registration Approval Form for Local Major Overseas Investment Projects. The period of such review may last 20 days or longer, depending upon the circumstances. An extended review period is possible. Before issuing the approval, the relevant government division shall register the application with the NDRC. For those investments exceeding substantial thresholds, NDRC review and approval is absolutely required. For resource exploration and exploitation-related investments reaching US$300 million and beyond, or non-resource development related investments reaching US$100 million or more, investment applications must be submitted directly to the NDRC. The NDRC shall, within 20 working days of its official acceptance of such investment project application documents, complete its review or submit the application to the State Council. The NDRC may in some instances extend the review for an additional 10 days beyond the normal 20 working days review. The proscribed review period would not include time granted to a consulting firm to consider the application on behalf of the NRDC or State Council. The aforementioned “special projects,” regardless of the amount of the investment, must be forwarded to the NDRC for approval after the provincial-level DRC conducts a preliminary review. In some cases it must be passed to the State Council for review after the NDRC conducts its own preliminary review. Any investment in Taiwan, no matter the amount, must be sent to the NDRC for review and may be forwarded to the State Council for review after being preliminarily examined by the NDRC. There are no mandatory application documents required in the course of application to the DRC. Documents to be reviewed by the DRC may include those which:
Throughout the DRC review process, officials will consider how closely the proposed investment corresponds to the standards identified in the officially-promulgated “Guidance Catalogue of Outward Foreign Direct Investment in Foreign Countries and Industries,” a document that details those geographic locations and industries of highest investment priority to Chinese authorities. It would likely be one of the most important guiding documents considered during the approval process. The catalogue is highly detailed and identifies specific industries in specific countries where investment is officially prioritized. For instance, it is so specific that it lists the Syrian property industry as a preferred investment, an investment priority that may now have come under review because of the on-going civil war. The document is very similar to the “Foreign Investment Catalogue of FDI,” which categorizes priority inbound investment. Because China’s economic development and the global economy are highly dynamic, the DRC would likely consider the catalogue’s priorities in light of ongoing economic development and current issues in foreign currency exchange and international trade, among others. Ministry of Commerce Review Process The MOFCOM review will likely focus greater attention upon the commercial feasibility of a proposed investment. MOFCOM also appears to be specifically assigned the task of considering the local conditions at the destination point for OFDI by means of communication with the relevant local Chinese consulate or embassy. As mentioned previously, MOFCOM will specifically consider the geopolitical context of the investment as part of the approval process. By way of specific example, the previously identified priority of the Syrian property industry might undergo reconsideration and reversal at this point after a MOFCOM review of the local situation. Chinese regulators also appear to be very concerned about avoiding negative publicity generated by managerial missteps in a global environment that continues to be very mistrustful of the intentions of Chinese investors. For these reasons, Chinese regulators at MOFCOM would likely more closely scrutinize the probability of success or failure of the investment enterprise and consider the risk of generating a negative reaction. They may require certain corporate initiatives to lessen the likelihood of such a backlash. As necessary in sensitive situations, MOFCOM may consult with the relevant offshore Chinese embassy or consulate as part of the evaluation of the application The documents to be reviewed by MOFCOM would include an application letter and two pro-forma document templates provided by MOFCOM. The information requested may include the following:
SAFE Review Process The documents to be reviewed by SAFE would include the following:
Post-Approval Supervision of OFDI
Depending upon the results of the annual inspection, the investment enterprise may qualify for “Level 1” preferential support from Chinese authorities, including receiving priority handling during official procedures related to foreign exchange, customs, taxation, and personnel entry/exit. If the enterprise does not qualify for “Level 1” treatment, then it may be placed in a lesser category where even remedial steps may be required. For instance, “Level 3” status would require the investment enterprise to correct regulator-identified deficiencies within a prescribed period of time not exceeding one year, otherwise such investor’s OFDI approval would be revoked. If an investment enterprise fails to submit itself to such annual inspection, MOFCOM, SAFE and other relevant authorities would be required by law to refuse any overseas investment application of such enterprise, including, for instance, any application for payment in foreign currency, any application for the establishment of new overseas enterprises, or any application for the dispatch of personnel to an overseas location. Conclusion Although Chinese SOEs will likely continue to serve as the primary conduits for investment of these resources, they have traditionally been slow and cautious. Can private Chinese enterprise step into the breach? Can Chinese regulators respond quickly enough to allow such an evolution, or will the existing cautious and cumbersome approval and review processes prove a hindrance? In July of 2012, in an effort to accelerate OFDI growth, Chinese regulators increased the monetary value of some approval thresholds tenfold. Additionally, Chinese authorities recently put forward proposed revisions to the OFDI regulatory approval process for public review and comment. These revisions, if approved, would relax the approval process. These are positive steps forward. However, despite these signs of improvement, the question remains whether Chinese regulators will adjust rapidly and effectively enough. It is very possible Chinese bureaucracy and regulators will continue to act in an essentially defensive and cautious manner in approving and supervising outbound investments. They will probably act vigorously to ensure that all such proposed investments correspond closely with China’s greater strategic objectives and that as few mistakes as possible are made in the course of such investments to avoid unwanted national embarrassment or negative publicity. " |
Kinas Outbound Foreign Direct Investment matcher perfekt til Danmarks kernekompetencer
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